Good afternoon, and welcome to the General Motors Company First Quarter 2022 Earnings Conference Call. During the opening remarks, all participants will be in a listen-only mode. After the opening remarks, we will conduct a question-and-answer session. As a reminder, this conference call is being recorded Tuesday, April 26, 2022. I would now like to turn the conference over to Ashish Kohli, GM's Vice President of Investor Relations. Please, go ahead.

Thanks, Sue. Good afternoon, everyone, and thank you for joining us as we review GM's financial results for the first quarter of 2022. Our conference call materials were issued this afternoon and are available on the GM Investor Relations website. We are also broadcasting this call via webcast. Joining us today is Mary Barra, GM's Chair and CEO; and Paul Jacobson, GM's Executive Vice President and CFO. In addition, Dan Berce, President and CEO of GM Financial; and Kyle Vogt, CEO of Cruise, will be joining us for the Q&A portion of the call. Before we begin, I would like to direct your attention to the forward-looking statements on the first page of our presentation. The content of our call will be governed by this language. And with that, I'm pleased to turn the call over to Mary.

Thanks, Ashish, and welcome to General Motors, and good afternoon, everyone. Today, my remarks will focus on the ways in which the disciplined approach to our transformation is fueling momentum that will establish General Motors as an EV and AV leader across our product portfolio, our patented LTM platform and our supply chain in addition to other initiatives. But I want to begin by thanking our employees, our dealers, our suppliers, and our unions for helping us deliver yet another strong quarter, a clear measure of the momentum we have. Our strong earnings in the first quarter were very similar to a year ago, and they show that we deliver on our commitments. Going forward, we have many revenue and cost opportunities to deliver our full year guidance, which we are affirming today. Last quarter, we discussed our plans to launch more EVs faster because they are catalysts for our growth. We have been very deliberate in our approach to get EVs right and to get solutions that are scalable and position us for leadership in key segments like pickups, luxury, and affordable EVs, and deliver programs and services that support margin expansion. This includes the dedicated EV engineering group we formed in 2019 to develop the Ultium platform, the software organization that we brought together and created that same year to generate more recurring revenue by leveraging connectivity and the foundation of that is our vehicle intelligence platform and now Ultifi. The EV growth organization we formed in 2020 focuses on the consumer experience and removes inefficiencies from our distribution system; the three battery plants we are opening in the United States between this summer and 2024, with the fourth plant to be announced shortly; and the creation of a sustainable, scalable, and North America-focused EV supply chain to control our own destiny; and a manufacturing plan that leverages our talent and our scale, including existing plants like Factory ZERO, Spring Hill, CAMI, and Orion, and also our close partnership with Honda, which includes both EVs and AVs. We are now in a rapid launch cycle, because of the investments we've made over the last several years. Taking these steps has allowed us to establish an unparalleled foundation on which to execute and scale. Because of this, our drive to produce 400,000 EVs in North America over the course of 2022 and 2023 is underway. For example, in the short span of time, Chevrolet, GMC, and Cadillac brands will launch six high-volume EV products into the luxury, SUV, and truck segments, all enabled by Ultium. We are also working on a fully electric Corvette, as Mark shared yesterday, as well as an electrified Corvette that will arrive next year. The response has been overwhelming. So by the end of 2025, we will have installed capacity to build 1 million EVs in North America, representing approximately $50 billion in annual revenue. Cadillac will be our first all-electric brand, and its journey began last month with the production launch of the LYRIQ. Unlike all of our EV entries to date, the response has been very strong. We began taking orders for the full range of LYRIQ models on May 19, and production at Spring Hill will accelerate through the second half of the year and into 2023. I visited the plant last week and the LYRIQ looks absolutely great. We will also have more affordable models that will be a major source of growth for Chevrolet and Buick. We are quickly regaining momentum with the Bolt EV and EUV now that production has resumed. In fact, we plan to produce more than 50,000 Bolt EVs this year for global markets, including a record 40,000 deliveries in the US. The first high-volume Ultium-based SUVs for Chevrolet will launch next year. Chevrolet has already previewed the all-electric Blazer SS, its first fully electric SS model. We'll reveal the full vehicle in July, and it goes into production mid-next year. In early fall, we will reveal the Equinox EV, and the launch is scheduled just after the Blazer EV. With a starting price of around $30,000 MSRP, the Equinox EV is a true white space opportunity for us, since most affordable EVs from Chevy's competitors start at $40,000 or more. Of course, our biggest growth opportunity in North America is in trucks. We have led the industry in full-size pickup sales for the last two years, and we will lead in EV pickups as well. We'll do it by leveraging the capability and flexibility of our purpose-built LTM platform and decades of truck design and engineering expertise, as well as extensive customer insights. The GMC HUMMER EV pickup is just the beginning. People who have driven the HUMMER EV confirm it is a super truck. One media influencer said, you somehow mixed the Raptor, TRx, Bronco, and Wrangler all in one package, made electric and better than all of them. We agree. March was our best month for HUMMER EV reservations since we unveiled the SUV a year ago. We now have more than 70,000 reservations for the pickup and SUV models, and we are accelerating production through 2022 and into 2023. You will see many of the HUMMER EV's best attributes available in the Chevrolet Silverado EV, including superior range, faster fast-charging capability, four-wheel steering, Super Cruise, and a larger, more flexible pickup cab and bed compared to our closest competitor. Just yesterday, we shared that Ultium vehicles, including the HUMMER EV and Silverado EV, have a new patented energy recovery system that uses heat from the battery packs to optimize range, performance, charging times, and passenger comfort, without adding mass or cost. These are the kinds of Ultium platform innovations that are driving a surge in Silverado EV demand and are an example of the benefits of taking the time to establish a dedicated and scalable platform. We are now at 140,000 reservations and growing, including retail customers and nearly 400 fleet operators, up from 240 last quarter. Production of the Silverado EV will begin at Factory ZERO in Detroit-Hamtramck in just 11 months, followed by Orion Assembly in 2024. We will begin building preproduction Silverado EVs in a matter of weeks. The supply chain supporting our EV production will also be a competitive advantage for us. Our strategy is to control our own destiny. So we forge long-term strategic relationships. We have invested alongside industry leaders and startups alike, and we are sourcing as much as possible from North America and strong trading partners like Australia. This includes rare earth material, permanent magnets, cathode active material, and lithium, as well as the cobalt agreement we announced this month with Glencore. We're also in the process of securing additional long-term supply agreements for nickel. Even as we scale our EV and AV businesses, which currently account for about 80% of our product capital spend, the earnings power of our ICE business will grow. In the first quarter, for example, we launched new versions of the Chevrolet Silverado and the GMC Sierra. These trucks have new designs, technology, and improved functionality, including a new 13.4-inch infotainment screen on most models, Super Cruise with hands-free trailering, and new off-road and premium models like the Silverado ZR2 and the Sierra Denali Ultimate. To help meet demand, we will add a third shift at our Oshawa Assembly Plant during the summer to build both light-duty and heavy-duty models. At the same time, we are executing major reductions in complexity and engineering expense across our ICE portfolio. For example, we compressed the footprint for today's Equinox and Terrain from three to two plants, enabling us to create white space capacity for EV expansion. We also achieved about a 70% part sharing and reuse on these models along with more than a 90% reduction in build combinations. We sharply reduce build combinations of the Silverado as well, and we're applying these significant cost avoidance strategies across all of our next-gen ICE programs. For example, our next-generation Traverse, Enclave, and Acadia will have one-third fewer unique parts and launch with higher EBIT than today's models. I'd like to wrap up with an update on Cruise. During the quarter, we took the opportunity to increase our ownership position to approximately 80% because we are extremely bullish on the team's rapid progress toward commercialization. As Kyle shared on our last call, Cruise continues to make great progress safely and deliberately, expanding its full driverless operations in San Francisco. Cruise is now operating in about 70% of the city and is moving toward operating 24/7 across the entire city by the end of this year. Already, the fleet has traveled about 40 times the distance from San Francisco to New York City, all in driverless mode and all in a highly complex environment. This includes several hundred rides for members of the public. We'll have more Cruise news to share as it completes the permitting process to charge for rides in San Francisco and as the Cruise Origin launch at Factory ZERO approaches. And now, I'd like to turn the call over to Paul.

Thanks, Mary, and good afternoon, everyone. Thank you for taking the time to join us today. We delivered a very strong first quarter, including over 10% year-over-year revenue growth, fueled by robust demand for our products, especially for our full-size trucks and SUVs. Our plants were largely running regular production, as the team worked to overcome semiconductor and other supply constraints. Strong customer demand for our products has continued into April, with most vehicles continuing to turn immediately as they arrive at dealers. As Mary highlighted, we've continued to take strategic actions designed to create long-term shareholder value and prioritize investments in EVs and AVs that will help accelerate our growth. In the case of Cruise, we utilized approximately $3.5 billion in cash to capitalize on an opportunity to increase our ownership percentage from just over 60% to approximately 80% at a very attractive private market valuation. Our increased ownership percentage in Cruise triggered a reconsolidation for income tax purposes and lowered our expected full year adjusted effective tax rate by 3 percentage points to approximately 20%. As a result, and to be transparent, we increased our full year EPS diluted adjusted guidance by $0.25 to address this. This transaction is directly in line with our capital allocation priorities to invest in businesses that drive outsized growth opportunities, given the tremendous long-term potential we see at Cruise. Now let's turn to Q1 results. We generated $36 billion in revenue, $4 billion in EBIT adjusted, an 11.2% EBIT adjusted margin, and $2.09 per share in EPS diluted adjusted. These results demonstrate the resiliency of the team and our ability to mitigate the impacts of higher commodity costs, as well as investments in our growth in the EV transition. In fact, our results were similar to the first quarter of last year despite $2.5 billion in higher costs, highlighting the strength of our products and the demand environment. Sequentially, we saw growth in total company wholesale volumes of 12% from Q4 2021. We recognize the consumer is facing inflationary pressures. However, we continue to see ongoing strong customer demand for our vehicles, including our refreshed full-size pickup trucks, as Mary mentioned. We were able to protect against significant plant downtime, and the team worked effectively to minimize the impact of continued short-term disruptions from semiconductor and other challenges. Overall, we see the availability of semiconductors continuing to improve and are working closely with our supply chain partners to help deliver our full year total company wholesale volume goal of 25% to 30% growth. Adjusted automotive free cash flow was breakeven for the quarter, an improvement of $1.9 billion year-over-year, driven by favorable working capital, partially offset by higher CapEx and the non-recurrence of a GM Financial dividend during the quarter. Now let's take a closer look at North America. In Q1, North America delivered EBIT adjusted of $3.1 billion, flat year-over-year, driven by strong pricing on our full-size trucks and SUVs, offset by higher commodity costs and investments in growth. We're also pleased to achieve EBIT-adjusted margins in North America of 10.7%, on track with our 2022 full year guidance of 10%. New vehicles have continued to turn very quickly, and U.S. dealer inventories remain tight at around 270,000 units, with much of this inventory in transit, while grounded inventory on dealer lots is less than 15 days. We continue to see ATP increases across our vehicle segments, including a year-over-year increase of 10% for trucks and 20% for crossovers. While the first quarter presented challenges for commodity and logistics costs, our teams are working effectively to manage these dynamics. We have contractual protections in place for some commodities to help ensure supply and to provide some protection against cost volatility. We also made some proactive decisions early in the year to bolster our supply and provide pricing protection. For example, we secured palladium inventory that is sufficient to meet our production needs through the end of this year. Through these actions, our commodity and logistics headwinds year-over-year came in line with our expectations at around $1 billion in Q1. Consistent with prior guidance, we saw increased investments, primarily in engineering and software development resources, as we continue to vertically integrate to help drive revenue from our new hardware and software platforms. Now let’s move to GM International. GMI delivered first quarter EBIT adjusted of $300 million, results consistent with Q1 2021. This included $200 million of equity income in China, down $100 million year-over-year, driven primarily by recent COVID impacts, partially offset by stabilization in pricing and continued cost actions. EBIT adjusted in GMI, excluding China, was $100 million, up $100 million year-over-year, with results driven by favorable volume, pricing, and mix, partially offset by commodity and semiconductor impacts. We continue to see momentum in the international business, and I'm really proud of the work that the team has been doing. A few comments on GM Financial and corporate expenses. GM Financial delivered solid results again, driven by strong used vehicle prices and favorable credit performance, with Q1 EBT adjusted of $1.3 billion, up $100 million year-over-year. Used vehicle prices were modestly lower sequentially in Q1 to Q4, but we would not expect to see an impact unless used car values decline another 10% to 15% from current prices. Corporate expenses were $400 million in the quarter, almost exclusively driven by differences in year-over-year mark-to-market changes, which also includes the first quarter profitability for the whole company. Moving to Cruise. As I mentioned earlier, we captured an opportunity in Q1 to acquire additional shares in Cruise, and we also initiated a program to provide an ongoing liquidity opportunity for Cruise employees. The liquidity opportunity included a modification to existing equity awards to remove the requirement for liquidity event vesting, resulting in Cruise recognizing a $1.1 billion compensation expense in Q1 for the awards that would have previously reached their time vesting threshold. We treated this expense as special for purposes of EBIT adjusted, given the expense would have been recognized previously under the modified terms. Going forward, future stock compensation expenses at Cruise will be recognized over the vesting period in earnings. Inclusive of the incremental stock compensation expenses, we expect full year 2022 expenses at Cruise to be approximately $2 billion. Turning to our 2022 outlook for the calendar year. We have a number of tools at our disposal, as we've demonstrated, to help offset higher costs and are taking active steps to ensure that we deliver on our full year 2022 guidance range of EBIT adjusted of $13 billion to $15 billion and North American margins of 10%. We're utilizing similar strategies, as we have in the past, to offset these commodity and logistics costs which are currently projected to be approximately $2.5 billion higher than the $2.5 billion included in our original guidance earlier this year. These strategies include pricing actions, as well as holding additional inventory of key commodities to manage price and global trade volatility. And as Mary mentioned, we're also being proactive in finding cost efficiencies throughout the company. In summary, we're off to a good start to the year, and the team is laser-focused in a dynamic environment, while at the same time executing on the launch of the Cadillac LYRIQ, accelerating production of the GMC HUMMER EV, and preparing for our future mass-market EV product launches. We are making the right long-term strategic decisions for the business, executing on our transformation that will support the long-term earnings power of the company and creating significant value for the shareholders. We are very optimistic about the future of the company and our vision of an all-electric future. I will now turn it back over to Mary for one last comment.

Thanks, Paul. Now I've said many times that the resiliency and creativity are drivers for our success, so is accountability. One reason why Cruise has accomplished so much so quickly is that the team is inspired by its mission, and everyone has a financial stake in the company's success. The new equity compensation program Cruise created is designed to reinforce its culture and to help to continue to attract the best and the brightest talent. Paul said, it has been very well received and it will help keep everyone focused on the mission at hand. At GM, our compensation has always been driven by the company's success, and no one should doubt our commitment to lead in EVs or the passion our team has for that mission. That's why this is the right time to directly link a significant part of the long-term compensation for me and every other GM executive to meeting our EV goals. Starting this year, we have added metrics for EV volumes in North America, EV launch timing, and EV launch quality to our existing EBIT margin and total shareholder return measures. The metrics are in place now, and they will appear in our proxy statement, which we'll file on April 29, but I wanted to share the news today to underscore our commitment to our EV future. Now Paul and I are happy to take your questions.

A reminder to analysts, we are asking to limit your questions to one and brief follow-up, so that we may get to everyone on the call. Our first question comes from Joe Spak with RBC Capital Markets. You may go ahead.

Thanks for the time. Mary, in your letter, you astutely highlighted that EV supply chain is important to control your own destiny and you've made some important announcements here in lithium cobalt. It sounds like something is coming on nickel. Can you help us a little bit, though, on like the timing for those agreements? And assuming all goes to plan, like how much raw input is already secured for that 400,000 units over that 2022 to 2023 time frame?

So Joe, I'm not going to get into specific quantities. But what I would say is, with all the work that we're doing, we feel very confident that we're going to be able to hit the 400,000 between 2022 and 2023 and get to 1 million units in North America and an additional 1 million units in China by 2025. We're even working on the 2026 to 2030 time frame, as we have pretty aggressive targets for our EV growth during that time. So, again, there's tremendous work that has gone on. It's been going on for well over a year, and we'll continue to announce things, not when we start working on them, but when we have signed agreements. So, again, I think this will be a competitive advantage for General Motors.

On pricing, you mentioned the strong pricing opportunity. I want to discuss pricing in relation to two aspects of your EV portfolio. First, is there a need to reconsider pricing on the Silverado given the recent trends in input costs? Second, regarding the 30,000 Equinox EV, which I recognize is an entry-level trim, is that still feasible in the current cost environment?

I think it is, Joe. I mean, we understand affordability for those customers, and we're going to work to work the equation. The advantages that we have because of the scale that we're going to have, the continued work we do on improving the next-generation chemistries for Ultium. So we're not raising those prices.

Thank you. The next question is from Rod Lache with Wolfe Research. You may go ahead.

Hi, everybody. Thanks for taking my question. I wanted to just ask about inflation. In North America, we're seeing levels of inflation that we haven't seen for decades. And I was hoping you might be able to just talk to us high level about how that affects GM's strategy over the intermediate term. Though, I see that you're expecting a 10% margin this year. As this kind of evolves and inventories normalize, rates go up, does this inflationary cost environment affect your ability to sustain this, or maybe just talk to us a little about how you're thinking about that.

Yes. Hey. Good evening, Rod. Thanks for the question. I think when you look at the track record of the company over the last couple of years, we've been able to pass through the inflationary pressures that we've seen to the customer. And that's really, I think, on the backs and the strength of the products that we've offered. Certainly, lower inventory levels have helped that in the short run. So I think it's been a very good tool for us. I think the billion-dollar question is, what happens when inflation is too much? And the thing we have to remember is these variables don't move independently. So in a world where we start to see inflation taking a toll on a consumer, you'd also expect there to be some reduction in commodity prices, et cetera, reflecting macro demand trends. So I think we're watching it very closely. And I think the message to take away from our first quarter performance, as well as going back through 2021, is the team’s been very nimble and adept at managing through this. And that's the confidence that we have today, at least, as we've given our guidance revision or our guidance reaffirmation, sorry.

Could you clarify if there will be any changes to the company's strategy as you anticipate the effects on consumers and rising rates? Also, as a follow-up, you mentioned $2.2 billion in higher costs in North America for the quarter. Can you provide more details on what contributed to that? It appears you had $1 billion in commodity costs, and now it's projected to be $5 billion for the year. Are you experiencing similar increases in supplier content costs throughout the year?

Yes. I mean, this is all based on sort of current forward curves and our expectations on what we know today. And I'm not trying to evade your question, I'm just trying to simply state that the world is very dynamic right now, right? So what we don't want to do is overreact to something that might not be here in six months or 12 months from now. So I think what we're doing and what the team has demonstrated, whether it's commercially or on the cost front, is we're doing the things necessary to hold the line in face of the pressure that we're seeing. So as long as we continue to do that, I don't think there's any change in the strategy of how we're executing that, and we feel comfortable with where we are right now.

Hey, Rod, the only other thing I would add, too, is we are seeing very strong demand for General Motors products. I mean, we have a new Chevrolet Silverado and GMC Sierra coming out, very focused on what the customer is looking for. We think that's going to continue to drive strong demand. And really across all of our products, whether it's the Trailblazer, all the way up to the full-size pickups and our midsized use as well. So I think we're going to continue to see, from a GM perspective, our product portfolio is very strong.

Okay. Thank you. And any color on just the supplier costs and whether those continue to increase from here?

From a supply base perspective, we are actively collaborating with our suppliers. We recognize that the current environment is affecting the supply base, and we are engaging with them transparently to grasp the specific impacts on their businesses. Together, we are looking for efficiencies to alleviate challenges and exploring additional measures to maintain a robust and resilient supply base. This is something we consistently do and will keep doing with our suppliers.

Thank you. Next, we have Dan Levy with Credit Suisse. You may go ahead.

Hi. Good evening. Thank you for taking the questions. Mary, I want to just pick up on that last question, and this is just on the supply side. Maybe you could just walk us through the supply constraints and give us a sense of how to look at the different constraints out there? I think you mentioned semis, that's going to ease in the second half. Where are we on the semis? And then as far as the Tier 2s, we're hearing periodically of some challenges on the Tier 2. So maybe you can just talk through where the supply side is right now? And at what point we can expect for you to return to full run rate production? I think on the prior call, you mentioned that you'd be at full run rate production in the back half of the year. And also, if you could address if Europe poses a supply risk to you in any way?

Let me address the last question first. Since we do not operate in Europe, we view it as a significant growth opportunity for our EV portfolio in the future, but we aren’t currently experiencing much impact. We collaborate with our suppliers to understand their tiers and ensure we are managing our supply chain exposure. Given the tragic situation in Ukraine, our exposure from Europe is quite limited, and we actively work to minimize those risks. Regarding semiconductors, we are on track and anticipate a 25% to 30% increase in wholesale volume compared to last year, with the second half of the year expected to be better than the first half. While there may be some residual challenges with semiconductors into 2023, we believe we can mitigate those. We also encounter various supply chain risks regularly, but our team is consistently working to find solutions and alternative sources. I am very pleased with their efforts. From a perspective related to China, we are noticing some positive developments as the government has recognized the automotive sector and supply base as essential, which helps maintain production. We believe, if these measures are implemented as planned, we can alleviate the impacts of lockdowns, which so far have been minimal. However, we understand the situation remains fluid, so we continue to monitor it daily. Overall, it is a very dynamic environment, characterized by some volatility due to global events, but we strive to stay ahead and find solutions. Our strong results in Q1 demonstrate our capability in this regard.

Great. Thank you. And then, the second question, Mary, I want to go back to one of your presentations from one of the conferences a couple of years ago. I think you noted at that conference that you were on track for the vehicle development process to essentially be cut in half, going from, call it, four years to two years. I just want to ask if the EVs that you have in your portfolio and that are in your pipeline are tracking to this development pace? And to what extent could we potentially see accelerated timelines versus what you've announced? Or is there just a simple reality that some of the supply constraints or the supply chain dynamics are still limiting the time from when you conceive a product to when it's ready to start ramping on production?

So, we delivered the HUMMER on time to what we said, and there were tremendous lessons learned. I think this is one of the benefits coming from having a dedicated EV platform and the way that it's modular plug-and-play and the wireless battery control system allows us to take time out of the vehicle development process. We were able to, looking at that, pull the LYRIQ ahead nine months. And so, we're definitely looking at every learning that we have from that. So it gives me confidence that we have shortened the time. Now going from taking almost half the time out, I'm not ready to commit that we're going to go even quicker than that. And I'm not going to say that's a supply base issue. When you're developing an all-new vehicle and making sure it has the technology and the features that customers expect, whether it's Super Cruise or everything from a connectivity and the upgradability that Ultifi will enable, I think as we continue on with the timing that we've demonstrated on HUMMER and the LYRIQ, I think, that we're going to be focused. That's going to allow us to have a pretty rapid clip of product launches, as you look at the HUMMER SUV that's coming, the Silverado EV, the Equinox, the Blazer, and the electrified Corvette. Another enabler of that is our manufacturing transition and the ability that we're not starting from the ground up, looking for a piece of property and going through the whole permitting process. We're transitioning our manufacturing footprint. Not only does that give us a timing advantage on turning the facility over, which we've now demonstrated with Factory ZERO and with Spring Hill, but also, we have a trained talented workforce that we're leveraging. Again, based on my trip, I've been at a couple of our plants lately and they're super excited with the new products they're rolling out. The speed that we've been able to bring EVs on is something that will continue.

Great. Thank you very much.

Thank you. Next, we have Mark Delaney with Goldman Sachs. You may go ahead.

Yes. Thank you very much for taking the question. The auto industry has been very successful at raising price in North America and at least, if not, more than offsetting some of the cost pressures. You mentioned in the call today, price being a potential tool to continue to offset increasing cost pressures that you're seeing this year. Can you talk about your confidence in being able to pass on higher prices to consumers, given some of the signs of weakness in consumer spending of late?

Yes. Hey, Mark. Thanks for the question. I think, as we've talked about, the demand that we see for our vehicles is quite strong, with most vehicles essentially being spoken for as soon as they deliver to the dealerships. You see that in the fact that while production is up, grounded inventory remains quite low. So we've got really strong demand. I think, the new pickups are also a big piece of that going forward. So whether the confidence is in the data we see and whether that's unique to General Motors, because of the high quality of our products, we haven't seen any demonstrated weakness from that perspective going forward. We have to be nimble, though. And as I mentioned to an earlier question, we have to watch that balance between the strength of the consumer, as well as what we see in the input costs and making sure that we've got alignment on that. What the team has done is we look at both go-to-market strategies, as well as cost reductions, and we've been targeting that. I think the team has done a really good job. We need to be nimble and flexible. But right now, we see nothing but strength in the consumer and the demand for GM products.

That's helpful, Paul. Thank you. And my other question was a follow-up on some of the comments you made about Cruise and the ability for employees to be able to monetize their holdings, even while Cruise is private. Do you have any more details you can share on that? Any data points in terms of employee retention or recruiting, given this ability for them to monetize their stakes? Thank you.

Sure. Thanks, Mary, and thanks, Mark, for the question. So, I guess, what you're getting at is, did this work? And the answer is unequivocally, yes. We've seen attrition go down substantially, even early this year to pre-COVID levels, which is really good. We also ran an engagement survey, and our engagement is up substantially compared to Q3 2021, the last time we measured it, and it was actually our largest jump ever. Career page visits are up substantially. And we have really favorable comments from existing employees and perhaps more importantly, candidates that are in the pipeline. So the reactions exceeded our expectations, and that's really what we hoped for, given that this was specifically targeted to help us attract the world's best talent to work on AVs, but also retain the great talent that we have.

All right. Thanks, Kyle.

Thank you. The next question is from Itay Michaeli with Citi. You may go ahead.

Thank you. Good evening, everyone. Paul, could you provide some insights on the incremental pricing you are projecting for the remainder of the year compared to Q1? Specifically, how much of this is influenced by overall industry pricing due to supply-demand dynamics, and how much stems from pricing opportunities related to your new products, such as the new trucks you are launching? It appears there is potential to reduce pricing gaps in relation to segment averages. I'm interested to know how this factor contributes to your outlook for the rest of the year.

Yes. Thanks, Itay. Well, I won't get into any specific pricing strategies about the future and what we're doing. I think, at the end of the day, as we said, the consumer demand for our products is quite strong. So when you look at the ability to capture price and demand from the content additions and the upgrades that we've made to the new models pickup trucks, that's well within the strategy and certainly what we've seen going forward. So I think there's an industry component. As we said at the beginning of the year, we don't expect industry inventories to increase substantially this year, even in the face of our own higher production, which I think has been a little bit more robust than what we've heard from some of our competitors going forward. So we think the supply-demand construct across the industry is good. And when you look at the combination of that with our products and what we've seen from our consumers, that's what gives us some of that confidence going forward, in terms of our ability to maintain where we are.

That's helpful. And then, just a follow-up on EV, and thank you for the updated disclosures on the reservations. Curious, if you can kind of share where you're seeing these reservations from a regional perspective and particularly around the coastal markets in the US, where your market share historically has been lower. So if you can maybe talk a little bit about the regional split in the EV reservations.

Yes, we are seeing not only new customers coming to General Motors but also a focus on both the East and West Coast, where demand is already stronger. As we predicted, we tend to underperform compared to what I consider our fair share on the coast, and we are witnessing the opportunity we identified; this is reflected in the reservations and the influx of new customers to the company.

Thank you. Next is John Murphy with Bank of America. You may go ahead.

Good evening, everybody. And I apologize in advance, but I'm going to stick on pricing for a second. There are many layers of pricing, right? There's the actual or the transaction price the consumer pays. There's the MSRP, then there's the invoice that you get paid from the dealer. And then there's other things on dealer holdback and floor plan assistance that impacts the net price that you realize from the vehicles from your dealers. So as you look at this, you're benefiting from strong price, but your dealers are actually benefiting even more so, with GPUs that are almost astronomical at the moment. I'm just curious if there's any change in the way that you're looking at the relationship in pricing to the dealers, maybe increasing invoice more than you're increasing MSRP or changing floor plan terms or anything like that, because there's arguably egregious grosses on the dealer side that might be better deserved by the folks that deploy billions of dollars of capital to generate it?

So, appreciate the question. And first of all, we do believe over the long term, people will see that our dealer network is a competitive advantage. They're highly experienced. We have not only the ability to meet the customer where they want, whether they want to do something completely online or actually go to the store, which cuts a lot of the customers. As we look at them, they still want to go in and literally kick the tires. What we have been doing is working together to unlock efficiencies to find a better way to serve the customers and to leverage those efficiencies. So we both reduce the overall cost of sale as opposed to looking at how the pie is divided. We've been very successful at doing that, as we roll out the new digital retail platform that we showed at Investor Day, which I think is going to be a huge enabler to reduce the cost of the sale. Again, we will share in a piece of that. We're confident in our plans, and we have the support of our network. We have over 95% of our Chevrolet EV dealers signing up to the platform and preparing for a phased rollout yet this year. And that's going to give customers the opportunity. They can expect to have accurate transparent pricing, and they also will be able to compare across dealers. We think that the work that we're doing with our dealers, because we see them as a partner, is going to make sure the customer has an overall exceptional customer ownership experience.

But, Mary, I'm sorry, so as we think about the MSRP increases that may be announced, should we think about the invoice going up in a linear fashion with those MSRPs. I'm just curious, because the invoice is obviously a lot different than the MSRP.

As we examine MSRPs, we notice a small number of dealers who are not adhering to our agreement with them. We take action, and they risk losing allocation. Generally, our dealers are following the MSRP guidelines. Some have even sent me letters assuring me of their compliance. We handle the few exceptions, but overall, I believe this is what customers will experience.

Okay. And then, just a quick follow-up. I apologize. I might have missed it. The wholesale volume assumption that goes into the FY 2022 guidance, I haven't seen it. Maybe I missed it in the press release or something. But I think you guys were talking about 25% to 30% before. Is that something that's still being reiterated, or has that changed?

Has not changed, yes. Hey. Before we proceed to the next question, I wanted to address Itay's inquiry. I found some information regarding the Silverado EV: 60% of the reservations come from new customers to GM, and 70% are from the East and West Coasts. I wanted to ensure the accuracy of these numbers before sharing them. But Itay, that's the data that supports my response to your question.

Thank you. Next, we have Adam Jonas with Morgan Stanley. You may go ahead.

Thanks, everyone. Hi, Mary.

Hi, Adam.

Hi. You said there's a handful of your dealers that are charging over MSRP. Could you be specific to give us a percentage of your volume that is transacting over MSRP in real-time in North America?

Adam, it is a small number. As I mentioned, we are addressing it, particularly considering the high figure involved. I don't have a specific percentage at this moment. However, we have collaborated extensively with our dealers in recent years, especially as they enter into our agreements and invest in selling electric vehicles. I am very confident that we will continue to work with our dealers to serve our customers effectively and ensure a great customer experience.

Okay, Mary. And then there are some EV peers of yours that are citing concerns that there will be – that there's an emerging battery shortage, okay, or at least bottlenecks in the supply chain that could really limit the plan – some of your remarks already, but I just want to ask it this way. Is there any part of your battery supply –

Hey, Adam, you're fading out. I heard you say, is there any part of your battery supply chain, and then you faded out.

Sorry. Is there any part of your battery supply chain that does present – that you think presents a risk to your volume targets at this point? I understand, the situation is fluid, but I wanted to give you a chance to flag any area that's getting a little extra attention from you.

For the numbers that we put out, the 100,000 in 2022 and 2023 and the 1 million by 2025, barring something completely unforeseen, I think that's where we are, and we're working to find upside opportunity.

Thank you. Next, we have Emmanuel Rosner with Deutsche Bank. You may go ahead.

Thank you very much. I was hoping you could help me better understand the outlook for this year, the way you see it now versus maybe two or three months ago. So it seems on the cost side at least the commodities are maybe $2.5 billion, a larger headwind than you saw it a few months ago. What are the offsets here? I think at the time, you were thinking pricing would remain strong, but not necessarily up year-over-year. How you're thinking now pricing could actually be up? And then on the cost-efficiency side, can you maybe talk about some of the opportunities that you have to create some of these offsets? And then just one more on this, is it also a function of where within the guidance serve your base case. Obviously, it's a $2 billion wide EBIT guidance. So is it also the case that you may have thought you would be at the higher end and now you'd be at the lower end, or is that not the case at all?

Hey, Emmanuel, thanks for the question. So I think it's a combination of things. Yes, we've talked about the $2.5 billion of incremental pressure. We hadn't commented specifically on the assumptions in terms of pricing. But I think what you've heard from us today is that we're reasonably confident about the pricing environment and the demand that we see for GM vehicles and what we've been able to achieve. We talked about in the prepared remarks about the price increases we've seen year-over-year from that perspective. The second piece of it is, going back to what we said about the full year. We talked about a couple of billion dollars of discretionary cost increases related to putting in the foundation for future growth. There's room to prioritize within that in terms of understanding what's converting to revenue sooner rather than later and making sure that we maintain flexibility. I think if you go back to our remarks, we talked about – we were putting that cost inflation in because we had the comfort around the environment at the time. While we've seen cost pressures on inflation, it allows us to go in and continue to manage that going forward. So between using that discretion, and prioritizing new ads as well as looking at core cost improvement in the business as we've done, I think the track record of the company is really strong. You go back to the programs we did, the $4 billion to $4.5 billion we said was done by 2020. The work we’ve done in GMI, by improving profitability, almost $2 billion over where it was in 2018, points to the team's ability to do that. While we haven't done an aggregate number that some of our competitors have done, I think when you look at the ability of the team to execute and the results we've posted over the last several quarters in the face of this adversity, I think the team should get some credit for that.

Understood. Could you clarify where you feel more comfortable in terms of guidance? As a follow-up, I would like to ask about the Cruise recurring liquidity program. Can you provide any early data on its popularity and how many employees have taken advantage of it? What is the expected liquidity cost to GM this year?

Certainly. I'll address the second part of your first question. We are comfortable with the guidance of 13 to 15%, as we've mentioned from the outset. There's a lot of variability, as we've communicated since the beginning of the year, and our stance hasn't changed. I would say we find ourselves in a similar position as in previous quarters. While the factors influencing our results may fluctuate significantly, our overall consistency remains intact.

Regarding the Cruise question, it's really too early in the first tender offer to provide any specific numbers. So, it's just too early to share anything on that front.

Thank you. Next is Ryan Brinkman with JPMorgan. You may go ahead.

Hi, thank you for taking my question, which is related to battery metals. Regarding the upcoming long-term supply contract for nickel and the recently secured contract for cobalt, can you confirm if these agreements are designed solely to secure a specific quantity of material, or do they also provide some mechanism to guarantee certain prices, which I imagine is much more challenging? Additionally, considering this, how do you view the risk of accepting orders for battery electric vehicles at a specified MSRP, especially if battery metal prices fluctuate significantly between when the orders are taken and production, which for some vehicles like the Silverado could exceed a year? Given the volatility in metal prices month-to-month or even day-to-day, is there a way to hedge this exposure, or does vertical integration of supply and mining potentially present a viable solution? I'm interested in your thoughts on this complex issue.

Hey, Ryan, thanks for that. I'll start, and Mary, of course, can add, too. We've discussed that our supply agreements are structured in various ways. We've mentioned funding some capital, handling preorders, and take-or-pay arrangements. We're also partnering with others on strategic ventures, so there's a wide variety of pricing mechanisms based on those structures. If we face some pricing exposure, we do have options to hedge that in the markets moving forward. We're cautious about not overreacting in the short term but are focused on finding the right long-term balance for our goals. I believe the teams have executed this very well so far.

Thank you. Next is Brian Johnson with Barclays. You may go ahead.

Hi, Mary and Paul. Thanks. I want to step back and ask kind of a broader strategic/organizational question given generally, which, as I talked about with people, could make a great business goal case study. Your principal cross-town competitors chosen a very different approach to EVs, both in terms of the level of preplanning in the organization that is rushing to market with a minimal viable product and then backfilling and creating a separate dev organization from the ICE organization. How have you thought about it at GM where you're not pursuing a similar NewCo, OldCo type of organizational strategy?

I appreciate your recognition of the investments we made a few years ago that have led to our current platform, allowing us to create products like the Silverado EV without any compromises, providing higher range and faster charging, among other features, all due to its ground-up design. It's important to note that this platform will offer scalability, resulting in cost advantages and high levels of reuse. I'm pleased with the changes we've implemented. Our organizational structure includes a dedicated team focused on the entire EV propulsion system, along with a Vice President overseeing all EV programs, chief engineers, and initiatives. Our EV Growth team is responsible for our market strategy and has developed the digital retail platform shared last year. Following our 2018 transformation, we integrated all our software, which has helped us accelerate progress since early 2019. We initiated the rollout of our vehicle intelligence platform that enables over-the-air capabilities in all vehicles, and we are now advancing this with Ultifi. You can see that many of the critical components for our EV success were established during 2018, 2019, and 2020. I engage extensively with our employees across the organization, and regardless of their specific roles, they are enthusiastic about our all-EV future. It's worth noting that over 40% of our salaried employees, and a larger proportion of our technical team, have been with us for five years or less, driven by our mission for EVs. We value every one of them and recognize their roles in our EV future, whether they are currently working on EVs, seats, software, or interior design—all integral aspects of an EV. Our focus has been on structuring the organization to ensure we lead in EV execution, which allows us to maximize scale and reuse, ultimately streamlining our EDP efforts.

And just a quick follow-on. On those EV product architecture, battery, et cetera, motor decisions, again, competitors will talk about rapid cycle decision-making, mid-model year, not just mid-platform, refreshes, changes of technology. So, how do you make sure that, that part of the organization remains agile as opposed to plans laid in 2017, 2018, 2019, that might, frankly, not be the right given current market conditions or new technologies?

There are two main points to consider. First, from a software standpoint, we have already launched VIP and are moving forward with Ultifi, which will significantly enhance our ability to make updates and improvements to your vehicle after purchase. This allows for downloads or over-the-air updates of features that were not available at the time of purchase. Our software team's approach is rooted in agility, ensuring that the vehicle continues to improve over time. From the perspective of our LTM, it is important to remember that it is not limited to a specific battery chemistry. We are collaborating with various companies and conducting internal research to ensure we have the best battery technology, and the LTM framework supports that adaptability. It is designed to be upgradable and can accommodate variations within the platform. A substantial amount of effort has gone into the design of Ultium to ensure it is flexible and ready for the ongoing changes in battery chemistry, allowing us to focus on reducing costs and enhancing energy density.

Thank you. Our last question comes from Philippe Houchois with Jefferies. You may go ahead.

Good afternoon and thank you. I have a couple of quick questions, mainly about housekeeping. First, earlier this year, like many other car manufacturers, you indicated that financial services would contribute less in 2022 compared to last year. However, looking at your first quarter, it actually performed better than last year. Last year didn't see as much of a spike in financial services contributions, unlike some of your peers on a quarterly basis. I'm curious if we should still expect a decrease in that contribution, or could the tight market create an opportunity for similar earnings in 2022? My second question is regarding your comments about Cruise costs, which are around $2 billion. Do you have any revenue guidance to accompany that as you begin commercial services, or should we assume that the $2 billion in costs represents your EBIT for the year? Thank you.

So, on the first question, Dan Berce is on the line. So, Dan, do you want to take that one?

Yes. Sure, Mary. So we earned $5 billion pretax last year. And our guide for 2022 is $3.5 billion to $4 billion. So, we do see a tail off in earnings. Now the first quarter was quite strong. But in the rest of the year two really things to consider. Number one, our residual gains will be less, primarily because of lower off-lease volume; and gains per unit will be less because we've slowed depreciation, raising book value. Even if we get the selling prices that we're seeing in the used car market today, the book value is higher so the gains are lower. The other factor on residuals is as we go out to lease terminations in 2023 and 2024, we've really been quite conservative in our marks for those years. 2022 maturities, yes, we're taking full advantage of market strength. As we go out to 2023 and 2024, we have not slowed depreciation as much. The other factor is on the credit side. We do expect normalization of credit as we go through 2022, both from a frequency standpoint and a recovery rate standpoint. So yeah, those two factors would be the difference between the $5 billion and our guide of $3.5 billion to $4 billion for the year.

And Philippe, it's Paul. With respect to the Cruise question, what I'll say is we haven't given any revenue guidance at all specifically as it relates to Cruise. I'll offer Kyle the opportunity, if he wants to talk about anything in terms of the commercial migration and where we are to the extent you haven't already done it, Kyle, if you want.

Sure. Real briefly. Just as a reminder, we're one permit away from being able to charge for rides, which would be the beginning of our generation of significant revenue with the only 80 company in California to have applied for that permit, and the only AV company carrying members of the public in the urban market, which is the only kind of place where early AV Robo Taxi fleets are going to be a viable business. We're on track this year. We're doing really well. We've expanded our geo fence from 30% of San Francisco to over 70%, increased the size of our fleet, and have expanded the hours of operation. We're progressing, as Mary said, toward that full 24/7 operation. We do believe, though, this is going to be highly disruptive, both in the long term for personal car ownership, and in the short term for ride-hailing type businesses, based on early customer feedback. Right now, we're maniacally focused on making sure that we delight our early customers and build the foundation for a really strong business down the road.

Thanks, Kyle.

Thank you. I'd now like to turn the call over to Mary Barra for her closing comments.

Great. Well, thanks, everybody. Paul and I and Kyle and Dan really appreciate all of your questions. As we move through this year, I want to reiterate, we're now in execution mode because we are building on the investments we made over the last several years with Ultium and with the products that we put together with the shortening of the vehicle development process. When we look going forward, we have incredible momentum with the three battery plants between now and 2024 and another to be announced shortly, as well as the conversion of four of our plants that have either happened or are happening in this timeframe. We're just going to keep executing and keep working toward our EV leadership goal. I think we have a team that has demonstrated that we're going to capitalize on opportunities, we're going to solve challenges and work with our stakeholders across the company to do just that. That's our commitment to you, and that's our commitment to our investors to really create value over the long term. I appreciate your commitment, and thanks. I hope everybody has a great evening.

Thank you. That concludes the conference call for today. Thank you for joining.